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It seems wrong that a brand discontinued by its owner should sell for $400 million.
Perhaps I just don't understand the consumer business.
Maybe that's why I'm a hardware designer...

It's not really the consumer business, it's the corporate chop-shop/knacker business.

"Hostess Brands" has reasonably strong product lines and revenue; but it was having trouble with those pesky 'employees' who wanted 'the wages and benefits specified in their contracts', like some kind of parasitic commies or something. Some of them even had the temerity to suggest that demanding that they take major cuts when the 'Chief restructuring officer' and other higher ups had received 80% raises was a show of rather bad faith.

By chopping up the company for parts, the various brands, which are valuable, can be divorced from any "legacy pension and medical benefit obligations and restrictive work rules"(as the company describes them, in the self-pitying tones of one who has conveniently forgotten agreeing to them...) and turned into sweet, sweet cash, any facilities worth keeping can be sold off, and operations and creditors who actually matter can continue as normal. (Thanks to a little strategic-under-funding of the pension plan, American taxpayers will get to do their part to ensure that real creditors come out unscathed.

If GM had failed, yes, they would have:

http://www.pbgc.gov/

Also, with unemployment unofficially at almost 19% (between unemployed, under-employed, and discouraged workers), I'd argue it was cheaper to prop GM up and wipe out bondholders than it would've been to provide social safety net services to 3-4 million people in the auto supply chain who would have been affected by the collapse of GM.

I'm not happy myself about the GM bailout, as I own a shitload of Tesla and Toyota stock and believe in free market competition, but I also understand protecting people's jobs in the worst recession since the Great Depression.

The world, it ain't black and white.

• Made their children compete with world labor rates (instead of far closer national or regional rates)
• Commoditize as much as possible to compete only on price.
• Exported millions of 'middle class' jobs, manufacturing, knowledge, service, etc.
• Raised the middle class workforce entry barrier to include a 4y degree, which in-debts twenty-somethings with a mortgage-sized payment without actually owning a house or property
• Driven up costs of housing by insane urban planning (or lack thereof)
• To paraphrase a quote generally attributed to de Tocqueville, they've hired legislators to bribe themselves with their own money. See all entitlement programs and the most recent redistribution, er...Bailout, nope, umm...Stimulus Packages (I think that's the PC term this week).
• Are prepared to tax Gen X/Y into oblivion to continue their excessive lifestyles. I'm interested in theories as to how my taxes WON'T go up, at any level of government.
• Created huge indirect taxes through legislation, think of the various mandatory insurances.
• Created a legal environment which is threatening to anyone trying to run a business, or develop new products, or treat patients.

As to the thread topic, unless those companies listed in the theory start buying up track rights, or property for new track, they're pretty worthless to the rails. Yes they have great manufacturing capacity and talent, but the railroads a

I chose not to respond to the "300% higher" comment because you were right, and it didn't need comment. Their wages aren't 300% higher, they're more along the lines of 30-50% higher in most cases -- NOT new hires, which are now lower than their competitors. This discrepancy has been mostly addressed.

Yes, the Big 3 have focused way too much on high profit margin, large vehicles and it is going to cost them. But keep in mind that for the longest time small trucks outsold cars in the U.S. They were building what people were buying. AND those models have higher profit margins than the smaller cars. Had the Big 3 been focusing on smaller, lower margin cars, they'd have been in this position sooner.

Yes, there is indignation in what the executives get at the Big 3, and rightfully so. But, it is hand-waving. The CxOs could work for $0 and it wouldn't make any appreciable difference to their bottom line. These companies are hemorrhaging BILLIONS, and you want to scream about a few ten millions. Yes, it needs to be addressed, but that issue is like carping about the amount of money spent on the National Endowment for the Arts in proportion to the Federal Deficit. A pittance, and a distraction from the real issue.

And I was just as vocal about the bailout for Wall Street. Feel free to check my journal, but don't put words in my mouth.

The simple fact of the matter is, according to GM's most recent 10-Q filing with the SEC (quarterly statement) is "post-retirement benefits other than pensions" and "pensions" make up the largest single chunk of their liabilities, at 26.6% -- down from 30% a year ago. "Long term debt" and "Accrued expenses", whatever the hell that is, make up another 25% each.

I'm not primarily blaming the unions, though they do shoulder some of the blame. I mostly blame GM, Ford and Chrysler who orchestrated this scheme way back when in their glory days. Their pension and benefits plan is similar to the U.S. Social Security model, where current employees pay for retiree benefits. That crap only works if "current employees > retirees". Once there are more people drawing benefits than paying into the pot, you start rapidly going into the hole. GM and Chrysler are now very deep in that hole. This is really nothing more than a legalized Ponzi Scheme. That scam only works if you have an ever increasing number of new investors (employees), which is eventually impossible. It is what gutted the U.S. steel industry and is now going to do the same to the U.S. auto industry.

I'm not targeting unions. The Big 3 made their bed and should be required to lie in it, even if it kills them. But the unions need to realize that their retirement packages ARE a big chunk of the costs. Those benefits are directly tied to the Big 3 still being in business -- unless you feel confident about the U.S. Pension Benefit Guarantee Corp taking over. It is time for the unions to deal with the reality that the Big 3 made promises they couldn't keep.

The unions share part of the blame for blindly accepting such deals. If someone promises you the moon, you have a certain responsibility to find out if they can actually deliver on those promises. "But you promised!" doesn't have any pull outside the playground.

"Because if we don't, then tax dollars just end up being used to bail the failing company out of debt, or pay for its employees unemployment benefits, or bail out the pension plan, or give them health benefits, etc. etc."

Actually, the US government already does this as a practice... check out the Pension Benefit Guarantee Corporation - http://www.pbgc.gov/ - which was created in the 70's. The interesting thing to consider though... if this organization was created in the 70's, doesn't this mean that the problem of huge unfunded liabilities was acknowledged 30+ years ago?

I'm not saying it's right. Only that it's reality. And yes, branches of government can incorporate. Ever heard of the FDIC or the PBGC? They're run differently from other branches of the government, but they're government offices nontheless.

The line between public and private sector has long been blurring. The worrisome thing here, to me, is that a non-government corporation was able to so easily influence a government organization.

I made the comparison not for the purposes of an exact analogy, but in order to evoke the image of an unbalanced financial house of cards. Which is what Social Security is.

Compared with what exactly? I agree that unfunded liabilities aren't so great, and I personally favor funding those liabilities explicitly, but something that has gone 70 years and will go decades more without any adjustment and at least decades further with moderate adjustment is hardly a "financial house of cards".

The only way that Social Security could be even vaguely analogous with a pyramid scheme or a ponzi scheme is if we expected that at some point people would stop having children entirely so there would be old people without any children to pay their pensions. Somehow I'm not expecting that. But if that happens, pensions are the least of our worries.

If you want to see a financial house of cards, take a look at the current US private pension scheme. The PBGC, the government agency that guarantees the solvency of private pensions, is in deep trouble and has been headed that way for years.

It would be nice to see the Bush administration fix immediate and pressing problems with retirement before embarking on ideology-driven, fuzzy-math solutions to problems that are, worst case, decades away.

You mean like the Pension Benefit Guaranty Corporation?

Looks like I was right.

Come on, as someone who has studied public service areas at great lengths it seems rather apparent that this is a ploy to add more money to the state budget, plain and simple.

Obviously you're not familiar with how pension funds work, or how they are guaranteed by the Pension Benefit Guaranty Corporation (PBGC). This is a government corporation that protects "defined benefit" pensions in much the same way that the Federal Deposit Insurance Corporation (FDIC) protects bank accounts.

Basically, if you have a defined benefit (as opposed to defined contribution like IRA or 401K) pension plan (also known as an ERISA plan; ERISA stands for "Employee Retirement Income Security Act"), you will either get that pension benefit from your employer's pension fund, or the Pension Benefit Guaranty Corporation will take over if the fund goes insolvent (up to a maximum of about $42,000 a year).

For more information, see PBGC's List of Frequently Asked Questions

And such a guarantee will likely not be necessary. Please be assured that pension funds are kept separate from the executive's golf/prostitute/liquor petty cash fund. At most company's, pension funds are VERY carefully invested and monitored (people can go to JAIL if they are not), and are designed to survive the companies that they are associated with.

Obviously you're not familiar with how pension funds work, or how they are guaranteed by the Pension Benefit Guaranty Corporation (PBGC). This is a government corporation that protects "defined benefit" pensions in much the same way that the Federal Deposit Insurance Corporation (FDIC) protects bank accounts.

Basically, if you have a defined benefit (as opposed to defined contribution like IRA or 401K) pension plan (also known as an ERISA plan; ERISA stands for "Employee Retirement Income Security Act"), you will either get that pension benefit from your employer's pension fund, or the Pension Benefit Guaranty Corporation will take over if the fund goes insolvent (up to a maximum of about $42,000 a year).

For more information, see PBGC's List of Frequently Asked Questions

And such a guarantee will likely not be necessary. Please be assured that pension funds are kept separate from the executive's golf/prostitute/liquor petty cash fund. At most company's, pension funds are VERY carefully invested and monitored (people can go to JAIL if they are not), and are designed to survive the companies that they are associated with.